The Importance of Organizational Culture: What Makes a Company Great?

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Organizational culture is the foundation of any successful company. It defines the values, behaviors, and workplace environment that influence employee engagement, productivity, and overall business performance. Companies sometimes rely on their cultures to attract top talent, improve their culture to foster innovation and maintain positive cultures to achieve long-term success.

Keep reading to explore the different attributes of a great company and the cultural traits that can either propel or hinder success.

What is a good company culture? (vs. poor culture)

There’s a misconception about company cultures that leads organizations to believe that a “fun” or “exciting” environment results in a connected and unified workforce that’s happy to be where they’re working. However, a company’s culture is not found in an employer’s perks and benefits.

A good organizational culture is “closely correlated with employee engagement, retention, innovation, and even customer service.” The true substance of a good company culture is what encourages employees to feel valued and motivated to contribute to the organization’s goals. It includes:

• Transparency and communication: Leadership is open about company decisions, ensuring employees are informed about strategic goals, company changes, and challenges. Open-door policies and feedback channels create a culture of trust and accountability.
• Inclusivity and diversity: A diverse workforce is encouraged and celebrated, fostering an environment where all employees feel heard, respected, and empowered to contribute their unique perspectives.
• Growth opportunities: Employees have access to mentorship programs, leadership training, and continuous learning initiatives. Career paths are clearly defined, allowing individuals to advance based on merit and skills.
• Work-life balance: Organizations promote healthy work habits by offering flexible schedules, remote work options, and employee wellness programs to reduce stress and prevent burnout.

In contrast, poor company culture is marked by:

• Lack of communication: Employees are left in the dark about important decisions, leading to uncertainty and disengagement.
• Exclusivity and bias: Favoritism, office politics, and discrimination prevent fair treatment and diminish teamwork.
• Limited career growth: Employees lack training opportunities, mentorship, and upward mobility, making them feel stuck and undervalued.
• Overwork and burnout: Unrealistic expectations, excessive overtime, and lack of concern for employee well-being lead to exhaustion and high turnover rates.

The consequences of a poor company culture are far-reaching and can significantly impact employee morale and organizational well-being. For an unfortunate business leader, these drawbacks may include high employee turnover and increased absenteeism, ultimately harming the company’s reputation and bottom line.

What is an ideal company culture? (vs. faulty culture)

Separating the great from the mediocre company cultures may be an easier task, but what organizations really care about is how they’re setting the standard for their specific workforce needs and production goals. This task, though daunting, takes some introspection.

What’s been working, what’s been holding a company back? That’s what a board member or owner needs to be asking when contemplating whether their company culture is ideal or could use some reworking. For most businesses, an ideal company culture embodies values that create a thriving workplace, such as:

• Trust and empowerment: Employees are trusted to make decisions without excessive oversight, fostering a sense of responsibility and ownership in their roles.
• Recognition and appreciation: Employee achievements, both big and small, are publicly acknowledged and rewarded, boosting morale and motivation.
• Collaboration and teamwork: Departments work together seamlessly, sharing knowledge and ideas to solve problems effectively.

A faulty culture, on the other hand, exhibits:

• Micromanagement: Leaders closely control employees’ every move, stifling creativity and autonomy.
• Lack of recognition: Employees feel undervalued when their hard work goes unnoticed, leading to dissatisfaction and decreased productivity.
• Siloed departments: Teams operate in isolation, reducing communication and cooperation, which hinders efficiency and innovation.

A company’s “culture has many dimensions, including practices, symbols, norms, rituals, ceremonies, beliefs, and values.” The underlying tone of an ideal culture dynamic for an organization is set by how the people of that company collaborate, thrive, and are fulfilled in their environment. Growth and success for a company and its people are shaped by the foundation set by the culture, whether done well or otherwise.

What makes a positive company culture? (vs. negative culture)

Experience doesn’t lie, but not everyone experiences a company’s culture similarly. So how can a CEO or owner truly know if a positive or negative attitude toward their company is a proper reflection of their culture?

In the same way that a company’s culture can be good or ideal, key elements promote employee satisfaction and business success, projecting a positive company culture inwardly and outwardly. The top two factors of a positive culture are:

• Strong management: Leaders lead by example, demonstrating integrity, clear vision, and a commitment to company values, inspiring employees to follow suit.
• Employee treatment: Companies prioritize mental and physical health through wellness programs, fair compensation, employee assistance programs, and social initiatives that foster a sense of belonging.

Conversely, a negative culture can be made visible by:

• Toxic Leadership: Management uses fear-based tactics, favoritism, or lacks transparency, leading to a demotivated workforce.
• High Turnover Rates: A revolving door of employees indicates dissatisfaction, poor leadership, and a lack of stability within the company.

Company culture is not something that can be fixed and forgotten. Even after tackling a negative work environment, leaders need to consistently revisit their organizational culture to identify areas for improvement.

Advantages of a strong company culture

“I don’t think there is anything more important. It basically dictates how you operate, how you treat your clients, how you hire, promote, and fire.” 

— Avetis Antaplyan, Founder, HireClout

A strong company culture doesn’t just impact internal operations; it also offers significant external benefits that ripple through an all-encompassing successful organization.

1. Companies with strong cultures build their credibility and earn respect in their industry. A company known for its integrity and accountability, consistently delivering on its promises, enhances its authority and public perception.
2. Organizations with engaged employees encouraged to think outside the box are able to experiment with new ideas and adapt to changing industry trends, ensuring the company maintains its competitive edge and remains forward-thinking. This contributes to companies outperforming competitors in innovation, productivity, and customer satisfaction, positioning themselves as industry leaders.
3. A thriving work culture attracts high-quality candidates who seek meaningful careers, while satisfied employees are more likely to stay, reducing hiring costs and boosting institutional knowledge. Companies are able to do more with less in their recruitment strategies and retention practices because their culture is doing the work for them.
4. Ethical business practices, strong leadership, and exceptional client experiences build trust, resulting in long-term relationships and brand advocacy. When value propositions are put to the test, the outcome is bolstered customer trust and brand loyalty.

Examples of companies with strong cultures

Many companies are known for their strong organizational cultures. While every workplace is unique, some shared characteristics include the extensive list above. But who are the examples putting these practices in motion? Here’s our top three:

Google

Over the years, Google’s culture has b-lined toward innovation, employee well-being, and collaboration through creative workspaces, professional development, and open communication.

“Google also sets itself apart in its now classic “ten things we know to be true” core values, which reinforce the concepts of doing good, working fast, and delivering excellent service.” – Achievers

Adobe

Since 1982, Adobe has solely focused on creativity access and freedom, digital productivity, and building up business and communities on a global scale.

“The team genuinely cares about their employees and seek to have a positive impact on the world.” – Business Insider

Zappos

This growing online retailer prioritizes customer service, core values, and employee empowerment, fostering a dynamic and people-first culture.

“Zappos is led by a vision of delivering happiness through the 4C’s, namely, commerce, customer service, company culture, and community. Prioritizing all these aspects has helped the company deliver happiness to customers, employees, vendors, shareholders, and the community long and sustainably.” – Vantage Circle

Business owners have the opportunity to build an environment where their employees and companies do more than just exist in the corporate world of numbers and productivity. By investing in culture, companies are able to strategically transcend stale and fixed industry characteristics, and take advantage of long-term success.